Tax

# Income tax and church tax

Who pays income tax? Employers deduct income tax directly from their employees’ salaries and pass it on to the tax office. The amount paid is calculated based on taxable income. Church tax is a tax collected by religious communities from their members. The amount paid is based on the amount of income tax paid.

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If you wish to obtain relief from German withholding tax, you may apply under certain conditions.

Wenn Sie als Person oder Ihr Unternehmen Geschäftsbeziehungen oder Beteiligungen mit Bezug zu einem nicht kooperativen Steuerhoheitsgebiet haben, müssen Sie bestimmte Informationen an das Finanzamt und gegebenenfalls Bundeszentralamt für Steuern (BZSt) übermitteln.
 

The system of providing wage tax deduction data in electronic form - the so-called ELStAM - has been in use for some time. ELStAM - has been mandatory throughout Germany since the beginning of 2014. This means that every employer is obliged to electronically retrieve the income tax deduction data of its employees from the tax authorities. The electronic wage tax deduction characteristics are made available in a database of the tax authorities for electronic retrieval by the employer. The tax authorities notify the employer of changes to the wage tax deduction data by means of change lists.

The common wage tax deduction features are generally formed automatically from the reporting data. These are regularly:
- the tax class (basis is the marital status)/
- the characteristic about the church tax deduction (denomination or non-denominational)
- possible child allowances for minor children.

This data is provided to the tax authorities by the registration authorities. Changes to the above data can only be made by the registration authorities.

If tax allowances are claimed in addition, these must be claimed using the appropriate form at the relevant tax office. The same applies if spouses/life partners wish to apply for a tax class combination other than IV/IV or if single parents wish to apply for class II instead of tax class I. Likewise, a correction of an incorrectly formed tax class must be applied for on a form at the tax office.

The change of tax class from VI to I (change of the first employment relationship) is made by the employee notifying the employer. The tax office is not involved in this process.

You have provided construction services for a company or a public corporation and construction withholding tax has been withheld on your consideration? If so, you can apply for a refund of the tax withheld under certain conditions.

In certain cases, employees are obliged to submit an income tax return without prior request by the tax office, because the actual annual tax liability can only be determined by means of an assessment.

This is the case, for example, when

  • the positive sum of the income that has not been subject to wage tax deduction, such as income from textile business, agriculture and forestry, self-employed work or pensions from the statutory pension insurance, is more than 410 euros per year or
  • the positive sum of certain wage replacement benefits, such as short-time work allowance, unemployment benefit and sickness benefit, was more than 410 euros per year or
  • both spouses have received wages and one of them is taxed according to tax class V or VI or
  • the factor method has been used for tax class IV or
  • an employee has received wages from several employers (including pensions) at the same time, or
  • An exemption has been granted by the tax office as part of the wage tax reduction procedure (ELStAM) (except for the number of child allowances or lump sum for disabled people) and the total wage achieved in the 2020 calendar year is 11,900 euros (2021: 12,250 euros), for spouses / partners who are assessed together Exceeds 22,600 euros (2021: 23,350 euros).

Anyone who is asked to do so by the tax office is also required to submit an income tax return. However, the obligation to submit an income tax return does not necessarily mean that an additional income tax payment can be expected. In fact, in these cases, too, there is often a tax refund, especially if there is no further income or tax-increasing facts.

For costs due to disability, you can apply for a disability lump sum.